- Fears for the world economy impact the markets.
- The dollar remains firm in a climate of risk aversion.
- Operators attentive to Powell’s words.
- Oil prices fall more than 4%.
The rally in equity markets ran out of fuel on Wednesday. Stock markets are registering significant declines, due to fears of recessions throughout the world. Powell submits semi-annual report to Congress.
Markets turn red
On Tuesday the shares on Wall Street had a great day with important rises, but on Wednesday the story is different and they are returning that rally. The S&P 500 closed 2.45% higher but futures, which trimmed losses, fell more than 1.2%. The rest of the US indices are also in the red. In Europe, the FTSE 100 falls 1.19% and the CAC 40 yields 1.60%.
Among the companies that fell the most were the energy companies, affected by the drop in the price of oil. coinbase it falls 8% in the premarket (on Tuesday it closed with a rise of 12%). KB Home, Celestial Biolabs and Steelcase are among the companies that will present results on Wednesday.
Concerns about the state of the global economy are driving equity markets to significant declines and boosting safe-haven assets such as Treasuries. The 10-year bond yields 3.20%, very close to the weekly low, and the 30-year bond is below 3.30%.
Despite the drop in yields, the dollar remains in the market, supported by risk aversion. Among the best performing currencies is the Japanese yen, albeit moderately higher considering the context.
The metals they recovered ground in the last hours, with gold leading. The XAU/USD climbed from $1,824 to above $1,840 and moved into positive territory. Silver is still negative but far from the bottom, XAG/USD is down to $21.22 (low since June 15) and is trading around $21.50.
The cryptocurrencies remain weakened in an adverse context. Bitcoin momentarily traded below $20,000, but then managed to regain ground, breaking above $20,500.
The expectation of lower global growth is weighing on oil prices that lost more than 4% on Wednesday. The barrel of WTI hit its lowest in more than a month, below $104.00 (trading platforms). US President Joe Biden plans to temporarily suspend taxes on gasoline, while seeking to boost the production capacity of oil companies.
The key event on Wednesday will be the presentation of Jerome Powell, the chairman of the Fed before the Senate Banking Affairs Committee. In addition, other Fed officials (Barkin and Evans) will speak in public. In Canada retail inflation data will be published. The US Treasury will place debt at 2 and 20 years.
Technical levels
Source: Fx Street
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